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BMO MSCI Emerging Markets Index ETF (TSX: ZEM)
Fund Card With the slowdown in China, and global demand for commodities weak, the emerging markets have struggled. For the year ending October 31, the MSCI Emerging Markets Index lost more than 14% in U.S. dollar terms. While the recent past is dismal, the medium to long term outlook is more positive. Valuation levels are significantly below historic averages. According to Brandes Investment Partners, the MSCI EM Index was trading at a 24% discount to the historic average, 30% to developed markets, and 35% lower than the S&P 500, based on...
read moreiShares MSCI EAFE Minimum Volatility Index ETF (TSX: XMI)
Fund Card Low volatility funds are designed to provide returns that are roughly in line with the broader equity markets, but also offer lower volatility, and much stronger downside protection. While there isn’t sufficient history for a lot of these funds, the early results are certainly encouraging. For example, according to Morningstar, for the past three years, XMI has shown a down capture ratio of 21%, meaning it experienced only a fraction of the downside of the broader market. This has resulted in a level of return that is much stronger...
read moreiShares US Fundamental Index ETF (TSX: CLU)
Fund Card Looking only at the fundamentals of the portfolio, this appears to be the most attractive U.S. ETFs around. Valuation metrics such as price to earnings, price to book, and price to cash flow are significantly more favourable than either the iShares Core S&P 500 Index ETF (TSX: XSP), or the Vanguard U.S. Total Market Index ETF (TSX: VUS). This is not particularly surprising, given the methodology used to select and weight the stocks. Tracking an index constructed by Research Affiliates, it holds the top 1000 U.S. listed companies...
read moreiShares Core S&P/TSX Capped Composite Index ETF (TSX: XIC)
Fund Card Canadian equities have struggled of late, with the S&P/TSX Composite Index losing 5.8% on a total return basis. There were two key factors driving this decline; continued weakness in the energy markets, and Valeant Pharmaceuticals fall from grace. The energy sector was off more than 3.3% as the outlook for oil remains weak. Until we see a stabilization in the energy markets, I expect Canadian equities to remain volatile. Valeant is another story completely. Not too long ago, it was challenging for the top spot on the TSX, with a...
read moreiShares S&P/TSX Canadian Dividend Aristocrats Index ETF (TSX: CDZ)
Fund Card With market volatility on the upswing, investors’ attention started to turn to better quality, and higher yielding issues, which this ETF invests in. To qualify for inclusion, a company must have increased dividends for at least five consecutive years. Another thing I like about this ETF is its valuation metrics look more favourable than the broader market, with valuations lower, and a yield that is higher than the S&P/TSX Composite. This should help to offer stronger downside protection if markets remain volatile. It also pays...
read moreBMO Monthly Income Fund (TSX: ZMI)
Fund Card At the end of November, the ETF held nearly 60% in income equity ETFs, 37% in corporate bond, and the rest, just over 4% in emerging market debt. For the three months ending October 31, it was down by 2.2%, which while disappointing, did manage to outpace the 60/40 equity / fixed income benchmark. A big key to this recent outperformance stems from its conservative positioning, with nearly 30% in short term bonds, and most of the equity exposure focused on higher quality dividend mandates. It is scheduled to be reconstituted in...
read morePowerShares Tactical Bond ETF (TSX: PTB)
Fund Card This is a tactically managed, diversified bond portfolio that provides exposure to Canadian government, investment grade corporate, and real return bonds, as well as U.S. high yield, and emerging market debt. The portfolio management team will tactically shift the exposure to a number of underlying ETFs in an effort to best position the portfolio for the market. To be blunt, so far, they’ve failed, gaining a very modest 2.55% for the year ending October 31, while the FTSE/TMX Canadian Universe Bond Index has gained 4.43%. The big...
read morePowerShares Senior Loan CAD Hedged ETF (TSX: BKL)
Fund Card It was not a good quarter for riskier parts of the fixed income market, including leveraged loans. For the three-month period ending October 31, BKL dropped 2.07%, lagging its peers, and benchmark. With markets becoming extremely volatile, investors shunned riskier assets, and instead moved into safer haven assets. If nothing else, this highlights why floating rate notes and loans should only be a portion of your fixed income allocation, and not as many wholesalers may suggest, a core part of it. Since the summer, floaters have been...
read moreFidelity Small Cap America
Fund Card Despite dropping 1.4% in the third quarter, the fund’s outperformance continued. The Russell 2000 was down 6.9% in Canadian dollar terms, while the average U.S. Small / Mid Cap equity fund lost nearly 5%. The recent outperformance was the result of strong relative returns from a number of technology and consumer discretionary names, with Ingram Micro and Jardine Group helping the cause. Manager Steve MacMillan, uses a bottom up approach, with sector exposure being the result of available opportunities. He continues to look for...
read moreManulife Strategic Income Fund
Fund Card Managed by a team headed by Dan Janis, this tactically managed global bond fund focuses on four key risks for investors; interest rate risk, credit risk, currency risk, and liquidity risk. For the quarter, it gained 1.75%, outpacing its peers. In a recent commentary, Charles Tomes, a trader, and member of the management team of this fund said they expect the recent high levels of volatility to continue. One reason for this view is the uncertainty caused by the divergent policies of many central banks, with some countries, like the...
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